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Assume the cost to store 10,000 million BTU of natural gas is $0.05 per month. Using the current spot price, and assuming that interest rates
- Assume the cost to store 10,000 million BTU of natural gas is $0.05 per month. Using the current spot price, and assuming that interest rates are 1.00% p.a., is the natural gas future priced accurately in the market? If the prices are out of line, please provide an estimate of the convenience yield. What does this tell you about the current state of the natural gas market? (Current spot price is $4.804)
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Storage cost per month 005 per million BTU x 10000 million BTU 500 Monthly interest rate 100 pa 12 m...
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Managerial Economics
Authors: Mark Hirschey
12th edition
9780324584844, 324588860, 324584849, 978-0324588866
